This is a fascinating article on ISDS from CBC news, explaining the tension between the EU and U.S. positions on ISDS, and how Canada is caught in the middle:
European Union officials quietly approached Justin Trudeau's new government last fall with a request to revisit the controversial investment protection clause in the Canada-EU trade deal.
Negotiations for the Comprehensive Economic Trade Agreement (CETA) were supposed to have concluded in the summer of 2014 — the former Conservative government led by Stephen Harper had trumpeted success since an agreement in principle in 2013.
But nothing was signed then. Or since.
Now, stoked by fears of setting a bad precedent for trade talks with the United States, well-organized dissent in Europe has taken hold.
It risks a humiliating defeat on a ratification vote expected at the EU's parliament in Brussels this fall, unless a compromise can be reached to appease moderate opponents.
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Europeans now see things as a two-part North American deal: part one is CETA with Canada, and its passage sets up part two with the U.S.
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Facing these political headwinds, the EU proposed a new Investment Court System (ICS) this fall. Unlike the case-by-case ad hoc tribunals that adjudicate in North America, this suggests permanently-appointed judges, a formal court of appeal and clear rules to make things fair, particularly for small and medium-sized businesses.
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Americans aren't receptive to the new court idea. Neither, at least fully, is Canada.
In an article written for a Polish newspaper last week and translated for Maclean's magazine by Canada's embassy in Warsaw, Canada's lead negotiator, Steve Verheul, candidly admits that the opposition to ISDS comes as a "significant surprise." (Ambassador Coninsx told CBC News her side didn't foresee it either.)
Speaking to the Polish audience, Verheul tips Canada's hand: "Canada can agree to some of the changes," the translation reads, but we have concerns that the [proposed court] is significantly more complicated and expensive. It also does not guarantee that a case will be heard by the most appropriate panel of judges."
"We think it will bring more assurances for some, but not more costs," Coninsx told CBC.
Trade lawyer Mark Warner, part of Ontario's legal team during the CETA talks, agrees with Verheul that while NAFTA's ad hoc tribunals are composed of recognized experts, the kind of generalist judges named to this permanent court could lack tailored expertise.
It all puts Freeland in a tight spot if she takes seriously her mandate letter marching orders to proceed with ratification as quickly as possible.
"I think the Americans will be pretty pissed off at us," Warner told CBC News.
If Canada agrees to a compromise the U.S. doesn't want, "it's like throwing a finger into their eye. And I thought Justin Trudeau said he was going to have better relations with [Washington.]"
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I suppose you could describe the situation this way. NAFTA has an older version of ISDS, which TPP will slightly tweak. CETA reflects an early EU reform of ISDS, which seemed like a big enough reform at the time, but it turns out it wasn't. Now the EU wants TTIP to include a bigger reform of ISDS (the investment court). The U.S. is skeptical of the investment court, but the EU has already been touting it, and the EU now feels like it needs to reform the existing CETA reform in order to get domestic support for CETA.
No doubt everyone is looking for a compromise, but in trying to balance out different national interests, along with different interest groups within each nation, I'm not sure there is a middle ground position that works very well.
